Binance Research: Principles, Current Status, and Future of BRC-20.

23-05-23 11:41
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Original Title: "BRC-20 Tokens: A Primer"
Original Source: Binance Research


Original translation: Lynn, MarsBit

Table of Contents

What are ordinal numbers and inscriptions?

What fields are BRC-20 tokens applicable to?

What is the market for BRC-20?

How does using BRC-20 tokens compare to using tokens based on other standards?

BRC-20's Impact on the Bitcoin Market

Homogenization and heterogenization.

Memory Pool

Transaction fees.

Community Response

"Qinfei" population

"Low fee" camp.


Risk and Challenge.

Due to the lack of infrastructure and practical utility, there is a high risk of fraud.

Future Outlook

Bitcoin Layer 2


Token design innovation

1. Key Points

BRC-20 tokens are the latest innovation from Ordinals Protocol and have taken over Crypto Twitter's timeline in recent weeks.

BRC-20 is an experimental token standard that supports the deployment, minting, and transfer of non-fungible tokens on the Bitcoin blockchain. Although the total market value of these tokens has even reached 1 billion US dollars, the tokens themselves are relatively simple and do not have any smart contract functionality, unlike ERC-20 or BEP-20 tokens.

Due to the coin minting frenzy in early May, the Bitcoin memory pool experienced severe congestion, causing a surge in network transaction fees.

Considering the importance of supplementing miner income as block rewards decrease over time, many people in the ecosystem welcome higher fees. However, others are more critical in discussing the drawbacks of pricing for users in more price-sensitive regions.

In this early stage of the market, BRC-20 tokens bring significant risks and require more infrastructure support. As the founder stated, this is an experiment and potential risks should be strictly reviewed.

Ordinal, Inscription, and BRC-20 tokens help demonstrate a clear organic demand for Bitcoin block space beyond traditional currency use cases. This may be a key factor in the long-term sustainability of the Bitcoin security model.

The development of Bitcoin Layer 2, support for BRC-20 infrastructure, and further token design innovation may be the next step in this legend.

2. Introduction

Since the launch of Ordinals Protocol earlier this year and the proliferation of Inscription (i.e. Bitcoin NFTs), innovation in the Bitcoin ecosystem has once again flourished. The latest result of this ordinal-driven innovation is the BRC-20 token, which has become wildly popular in the past few weeks.

BRC-20 was first conceptualized in March 2023 as an experimental token standard that supports the deployment, minting, and transfer of non-fungible tokens on the Bitcoin blockchain. This latest innovation means that both fungible and non-fungible tokens (NFTs) have become a part of the wider Bitcoin ecosystem. The total market capitalization of these tokens has been on the rise, surpassing $1 billion as early as May. In addition, the leading BRC-20 token $ORDI has already been listed on multiple exchanges.

Although many people are excited about the increase in internal activity of Bitcoin and the apparent new energy resonating in the community, others believe that this deviates from Bitcoin's "design purpose" and are not satisfied with the impact of these innovations on Bitcoin transaction fees.

In this report, we explore the origin of BRC-20, its current market outlook, a comparison with ERC-20 tokens, its impact on Bitcoin indicators, community division, potential risks, and our outlook for the future.

Disclaimer: BRC-20 tokens are extremely risky and in the early stages of price discovery. This material is not intended as a prediction or investment advice, nor is it a recommendation, offer, or solicitation to buy or sell any securities, cryptocurrencies, or adopt any investment strategy (please refer to the general disclosure on page 26). The creator of the BRC-20 token standard, an anonymous Crypto Twitter user named domo, named the GitBook for this token standard "brc-20 experiment" and began the page with the following content:


When reading the latest market developments through this Binance Research report, please keep in mind that:

3. Background

What are Ordinals and Inscriptions?

ORD is an open-source software that can run on any Bitcoin full node [1]. According to its founder Casey Rodarmor, it can track individual Satoshis ("sats") based on the "ordinal theory". Sats are the smallest unit of the Bitcoin network, with 1 Bitcoin equaling 100,000,000 sats. The ordinal theory assigns a unique identifier to every person on Bitcoin. Additionally, these individual sats can be "engraved" with any content (such as text, images, or videos) to create "inscriptions" (i.e. Bitcoin-native digital artifacts) [2], also known as NFTs.

...You can use any content (such as text, images, videos) to "engrave" a single satoshi to create an "inscription" (i.e. a Bitcoin-native digital artifact), also known as an NFT.

To learn more about ordinal numbers and inscriptions, including their history, technical background, specifications compared to other NFTs, and their impact on the market, please check out our recent report: "A New Era for Bitcoin?"

BRC-20 tokens are applicable in which fields?

Due to the fact that inscriptions allow for the use of non-fungible tokens ("NFTs") on Bitcoin, a natural question arises: "What about fungible tokens?" This is where BRC-20 comes in.

On March 9th, an anonymous Crypto Twitter user named "domo" tweeted about a theoretical method called BRC-20, which can create a standardized homogenous token on the Ordinals Protocol. The idea is to use ordinals to engrave JSON data onto a single sat, in order to deploy, mint, and transfer homogenous BRC-20 tokens. JSON is essentially a text-based data format, so in essence, this method writes text onto sats to create homogenous tokens. The initial design only allows for three different operations: deploying tokens, minting tokens, and transferring tokens (we will explore this and other limitations later in this report).

**The first token contract to be deployed is the $ORDI token, with each minting factory limited to 1K tokens and a maximum supply of 21 million (paying homage to Bitcoin's maximum supply).** This release caused a stir in a subfield of the Bitcoin community, and within less than a day, all 21 million ORDI tokens were minted. Soon after, other tokens emerged, such as $MEME, $PEPE (not the one that was uploaded to Ethereum and played wildly) and $PUNK.

Figure 1: The humble beginning of BRC-20 tokens (domo's first post on the topic).

币安研报:BRC-20——原理、现状和未来Source: Twitter (@domodata)

Figure 2: Three possible initial operations for BRC-20 tokens (p = protocol name, op = operation, tick = stock code/identifier, max = maximum supply, lim = minting limit, amt = amount).


Source:, Binance Research


来源:, Binance 研究

Note: The content contains HTML tags and English characters that should not be translated. Therefore, the translation is the same as the original text.

What is the market for BRC-20?

BRC-20 was only conceptualized a few months ago, and the history of ordinal and inscription is less than six months. It is fair to say that this market is still in its early stages. Nevertheless, developers and enthusiasts have been experimenting day and night. As of May 16, 2023, there are over 18,000 BRC-20 tokens with a total market value of $500 million. The market value was close to $1 billion in the days leading up to May, but as expected with any such frenzy, the market is self-correcting to find a more stable equilibrium point.

Figure 3: The top five BRC-20 tokens ranked by market capitalization at present.


Source:, as of May 16th, 2023.

The ordinal ($ORDI) token is the first BRC-20 token and still remains the market leader to this day. This is evident in both market capitalization and trading volume, and its recent listing on several different exchanges may contribute to its continued success.

How does using BRC-20 tokens compare to using tokens of other standards?

Although the name "BRC-20" is an imitation of the "ERC-20" token standard on Ethereum, there are significant differences between them.

Different Blockchains

BRC-20 tokens exist on the Bitcoin blockchain, while ERC-20 tokens exist on the Ethereum blockchain, and BEP-20 tokens exist on the BNB smart chain. Therefore, BRC-20 tokens rely on various features of the Bitcoin chain, which differ significantly from ERC-20 or BEP-20, such as transaction speed and fees, to name just two key factors. This means that your experience using BRC-20 may be very different from your experience trading on other chains.

Lack of smart contract functionality

ERC-20 tokens and BEP-20 tokens are created using smart contracts on the Ethereum and Binance Smart Chain blockchains, respectively. Therefore, they have a high degree of programmability and the ability to execute various operations and rules. This is in stark contrast to the relatively simple BRC-20 tokens, which are not based on smart contracts and have limited functionality (as shown in Figure 2).

Market Infrastructure

ERC-20 tokens and BEP-20 tokens are much more mature than BRC-20 tokens. Although the former has been around for many years and has led to the establishment of various types of infrastructure (such as DEX, compatibility with centralized exchanges, fiat on-ramps, cross-chain capabilities, etc.), the situation is not the same for BRC-20 tokens. Of course, BRC-20 tokens have only been around for a few months, so we cannot expect them to have a similar level of infrastructure. Nevertheless, this fact is worth keeping in mind because it highlights the significant difference in risk between them and more mature standards such as ERC-20 and BEP-20.

4. BRC-20 Impact on the Bitcoin Market

Homogenization and Heterogenization  

First of all, let's quickly understand the changes in the entire inscription market since the appearance of BRC-20 tokens. Please remember that BRC-20 tokens were first conceptualized on March 9, 2023, while inscriptions have been available since December 2022. As we can see, images were the main type of inscription used in the market in February. This was when the ordinal craze began and the Bitcoin NFT series emerged. Even from February to early April, although textual inscriptions became more common, there were still some days when images were the most widely used inscription media type.

Now, if we look at the period from mid-April to May, we will see a significant change. Text-based inscriptions (mainly related to BRC-20 tokens) have been dominant, basically squeezing out any other media types. In addition, the daily number of inscriptions (represented by the height of the bar chart) is several times the number we saw from January to early April. This proves that BRC-20 tokens have been able to generate huge popularity and momentum since their conception.

Figure 4: The daily inscriptions have increased significantly, with most of them being text-based.


Source: Dune Analytics (@dgtl_assets), as of May 16, 2023

In our report - "A New Era for Bitcoin?" - we provide a chart of the types of inscriptions that have been engraved as of March 30th. We can compare these numbers to the current composition of the inscription market to see how BRC-20 tokens dominate the entire market. As we can see below, text-based inscriptions have more than doubled in advantage in just six weeks, while image-based inscriptions have decreased by more than 5 times. In terms of the total number of inscriptions, they have increased from about 650,000 on March 30th to over 6.1 million on May 13th - an increase of nearly 10 times.

Figure 5: In recent weeks, text-based inscriptions have dominated the market.


Source: Dune Analytics (@dgtl_assets), Binance Research, as of May 13, 2023

Memory Pool

Reminder, the memory pool is essentially a waiting room for unconfirmed transactions that have not yet been added to a block. These are sorted by additional fees, and a more crowded memory pool means more competition to get your transaction into the next available block.

As of now, the total number of unconfirmed transactions for Bitcoin - that is, the number of transactions in the memory pool - has been increasing since 2023. Recently, the interest generated by inscriptions and BRC-20 has led to a significant surge in the number of transactions in the memory pool (compared to last year). This, in turn, has affected the cost of executing transactions on the Bitcoin blockchain (which will be further explored below).

Figure 6: The number of transactions in Bitcoin's memory pool has been steadily increasing this year, at least to some extent aided by ordinal numbers, inscriptions, and BRC-20.


Source:, Binance Research, as of May 14, 2023

Transaction Fees

As one of the most discussed indicators in the Bitcoin community, fees have been a focal point of debate dating back to the block size wars of 2015-2017 [4].

As a brief overview of this situation, let's review how the model of Bitcoin incentivizes miners to protect the network through two economic measures: block rewards and transaction fees. The block reward is halved approximately every four years and will eventually decrease to zero in the long term. Therefore, ultimately, the transaction fees of Bitcoin will be the only compensation for miners, that is, the security budget of the chain. Given that until this year, the use cases of Bitcoin have been relatively limited (mainly asset transfers), these fees have historically only accounted for a small portion of miner revenue and have been a concern for many in the Bitcoin community.

Figure 7: Bitcoin's annual security budget (block rewards + transaction fees) is mainly composed of block rewards, which are halved every four years and eventually reduced to zero.


Source: Dune Analytics (@niftytable), Binance Research, as of May 16, 2023

However, careful observation of the latest data from last year shows that transaction fees have increased from 1-2% of the total miner rewards to 2-3% at the beginning of the year, and skyrocketed to over 20% in May. Although we cannot conclude that this is solely due to the inscriptions and BRC-20, we have relatively sufficient reasons to believe that a large part of this measure is due to these innovations within Bitcoin.

Figure 8: The percentage of transaction fees in miner revenue is close to a historical high (note that the previous peak occurred in December 2017, when Bitcoin was in the midst of a historic bull market)


Source: The Block Data, Binance Research, as of May 14, 2023

Of course, not everyone is happy about the increasing transaction fees on the Bitcoin blockchain. Another consequence of this is that the fees required to send Bitcoin to another party will correspondingly increase (many people believe that this is the "true" utility of Bitcoin - more on that later).

The Bitcoin transaction fees have surged before, especially in December 2017 and April 2021. However, both times were during strong bull markets in the Bitcoin and cryptocurrency industry. This is the first time that fees have significantly increased in what many consider to be the middle of a bear market.

Figure 9: The average transaction fee for trading on Bitcoin has recently skyrocketed.


Source: The Block Data, Binance Research, as of May 14, 2023

However, it is worth remembering that Bitcoin transaction fees have soared in the past; this is not a unique or extreme event. The recent surge can even be seen as a warning that Bitcoin needs innovation to prepare for further future growth.

Finally, ordinal numbers, inscriptions, and BRC-20 tokens helped release a significant demand for the Bitcoin blockchain. They created a demand for block space that hasn't been seen in Bitcoin for some time. Many people thought that Bitcoin had lost attention to games like Ethereum, but the creation of inscriptions and BRC-20 tokens seems to be changing that. From a financial perspective, Bitcoin miners need to continue to receive rewards, even as block rewards decrease, fees must compensate for this loss of income, just like any business that expects core revenue to continue to decrease until it reaches zero.

Many people believe that Bitcoin has lost attention to games like Ethereum, but the creation of ZKS and STARK seems to be changing that perception.

5. Community Response

Using ordinal theory to track individual sats and further engraving them with data to create inscriptions sparked a fierce debate within the Bitcoin community. As you might imagine, the BRC-20 token has taken this debate to a new level.

"Pro-fee" population

As we discussed above, the sustainability of the Bitcoin security model has been a major concern for many in the community [5]. As block rewards continue to decrease, how will miners be rewarded in the future? What does this mean for the long-term viability of Bitcoin if miners are not adequately compensated to secure the chain? It is inevitable that miners need to be compensated for providing security, and as a result, Bitcoin transaction fees need to be higher. For this reason, many in the community are surprised by the attention given to tokens such as ERC-20 and BRC-20 and their impact on the relatively sluggish Bitcoin fee market.

Figure 10: Many famous cryptocurrency figures are optimistic about this new unlock


Source: Twitter (@danheld, @nic_carter)

It is inevitable that miners need to be compensated for providing security, which results in higher transaction fees for Bitcoin.

One specific community sub-sector that has benefited greatly from the recent development of Bitcoin is the mining community. To add more background information to our above discussion, please refer to Figure 11 to learn about the Bitcoin block reward halving cycles that have occurred so far.

Figure 11: Bitcoin Block Rewards for Each Successful Block


Source: Bitcoin Visuals, Binance Research

Although the price of Bitcoin has risen significantly since the era of the 50 BTC block reward, this table illustrates the challenges of the Bitcoin mining business model. With transaction fees supplementing their income and potentially signaling a bright future for block space demand, this equation appears to be more favorable to miners and may attract more people to join the network. Remember, the more independent miners there are, the better the decentralization, and ultimately the better the security of the Bitcoin blockchain.

It is worth noting that in early May, there was even a Bitcoin block with transaction fees higher than the 6.25 BTC block reward. This is a remarkable achievement, considering that for most of 2022, transaction fees have averaged 1-2% of miner revenue, and did not exceed much in earlier years (see Figure 8). This demonstrates that ordinal and BRC-20 have helped introduce a constantly growing demand for block space - even without a major bull market background.

Figure 12: The total cost of block 788795 is 6.46BTC, while the block reward is 6.25BTC.



"Low Fee" Camp

Although many people are excited about the increasing activity and buzz surrounding the Bitcoin ecosystem, and are encouraged by the sustainability of the increased costs, others are more critical. **This camp is more interested in Bitcoin's "true purpose" as a hard currency, a non-legal tender, and that the chain should be specifically used to facilitate peer-to-peer transactions.** This organization believes that data-intensive transactions associated with ordinals, namely inscriptions and BRC-20, will mainly cause congestion in the Bitcoin network and push up costs, ultimately hindering peer-to-peer transactions.

Although some people believe that the increase in fees has led to pricing for users in countries that rely on Bitcoin as a substitute for their local legal system, others have more extreme views, even believing that Serenity and BRC-20 are attacks on the chain.

Figure 13: Some people are concerned about the high pricing of Bitcoin users


Source: Twitter (@MarceMR19)

Figure 14: Others hold more extreme views


Source: Twitter (@proofofjogi)

Some people in the community even suggest that Bitcoin core developers should review transactions related to ordinal numbers. We don't need to explain why such a review would completely violate the spirit of Bitcoin, as the focus on decentralization is incredible.

Although transaction fees on the Bitcoin network are indeed rising, which will inevitably cost some consumers around the world, is this really a problem? The question we should be asking is whether users need to use the basic Bitcoin L1 to transfer $10 to their friends. This is the purpose of creating the Lightning Network, and the reason why Bitcoin chooses to use a fast and secure peer-to-peer payment solution. In fact, as you can see in our recent report "A New Era for Bitcoin?", the capacity of the Lightning Network continues to grow year by year, and the fees are still affordable.

The question we want to ask is, if a user wants to transfer $10 to their friend, do they have to use the basic Bitcoin L1 to do so? This is the purpose of creating the Lightning Network, and the reason why Bitcoin was chosen as a fast and secure peer-to-peer payment solution.

Trading on top of the basic L1 has never guaranteed to remain very cheap.

Even if the popularity of Bitcoin increases significantly, attracting millions of new users to use it for peer-to-peer transactions, it will have the same impact on transaction fees. Therefore, more Bitcoin usage is not a bad thing as it does not make consumers lose out on price, especially considering the future growth prospects of the network. In fact, the focus should be on making it more efficient and easier to integrate with the Lightning Network, and further work should be done for Bitcoin's L2 solution so that transactions can occur on layers beyond the underlying Bitcoin L1.


Before entering this section, we would like to remind readers to read the disclaimer on page 3 and the general disclosure on page 26. As mentioned earlier, we are discussing the cutting-edge things in the cryptocurrency market here and reporting on them to better educate and inform our readers. These technologies are very new and extremely risky. Please be extremely cautious when interacting with any of these projects or builders.

Perhaps the most important group are those who are building tools and infrastructure to take these innovations to the next level. Of course, the key builders to mention first are Casey Rodarmor, the founder of Ordinals Protocol, and domo, the creator of the BRC-20 token standard. Trevor.btc and Leonidas.og have also extensively covered the legendary stories of Ordinals and BRC-20, and have helped host the Ordinals Show podcast, which reports on the latest developments in cryptocurrency.

UniSat Wallet has been an early participant in the story of ordinal/BRC-20 in key projects. While initially offering a wallet for ordinals and then BRC-20, UniSat now also helps users subscribe to sats and recently launched a BRC-20 market (currently marked as "experimental testing"). It is worth noting that at the start of the market, in order to trade on UniSat, you needed to have already made a certain number of trades before being allowed to trade. This meant that early traders were extremely crypto-native (i.e. DeFi degens). These restrictions were later lifted and other trading venues continue to emerge. UniSat has also been developing a BRC-20 counter and has released some preliminary features related to this (more on this later). The website further notes that UniSat is in a testing phase, so please proceed with caution if interacting with the protocol.

Another noteworthy participant is ALEX. ALEX is a project built on top of Bitcoin's L2 and Stack, attempting to develop DeFi on Bitcoin while using Bitcoin as the settlement layer and Stack as the smart contract layer. Prior to BRC-20, they focused on swapping, liquidity pools, staking, farming, and bridging (classic DeFi primitives). They recently entered the BRC-20 token space and launched a test version of a decentralized exchange ("DEX") for trading B20. To trade BRC-20, users can bridge USDT from Ethereum or BNB chain to Stack USDT ("sUSDT"), and then use sUSDT to trade BRC-20. As mentioned earlier, the DEX is currently in the testing phase and was recently established, so please keep that in mind if you consider checking it out.

The last project we want to mention here is doing something different. The Rare Satoshi Society is in the business of finding the rarest bitcoins on the market and connecting them with collectors. They use Casey Rodarmor's descriptions of different levels of rarity to define these bitcoins, employ a novel approach to collecting bitcoins, and scan each bitcoin for uncommon and rare features using software. As we know from the collector's market, people collect anything from first edition newspapers to stamps to sports cars, so it's not surprising that this group decided to enter the sats collection market. Some are looking for a rare bitcoin to engrave a specific image on, while others are looking for bitcoins from specific blocks, such as the famous 10,000 BTC pizza transaction from 2010.

Figure 15: Casey Rodarmor's Ordinal Scarcity Index



6. Risk and Challenge

As mentioned earlier, ordinal numbers, inscriptions, and BRC-20 tokens are the latest innovations and are at the forefront of the cryptocurrency industry, with high risks in this early stage. These are neither the same tools nor have they occupied the same market as Ethereum, BNB, or Bitcoin itself. This is at the forefront of today's cryptocurrency work. Accordingly, there are some key risks that all readers need to be aware of.

Due to the lack of infrastructure

To put it bluntly, the BRC-20 token is simply an experimental token standard created by a Twitter user who isn't even using a real name. While we say this not to diminish the innovation and potential of this idea, we must first declare how early we are in this story.

The token standard has been in existence for several months, but it's only in the past few weeks that we've seen significant activity. While builders are working quickly and we've highlighted some project teams that are working hard to deliver relevant tools and infrastructure, there isn't much in existence at this stage. Yes, we've seen the beginnings of market platforms and DEXs, but most trading is still done off-exchange via Discord servers ("OTC"). Without a mature indexer, tracking tokens and holders is a tricky process.

In fact, the risk of centralized indexing is quite high because theoretically, if an exchange does not use the same indexer, they may not be able to recognize what you bought on another exchange. These tools are not native to the Bitcoin blockchain, but come from ordinal theory, which basically "associates" certain sats with certain features. If we do not reach social consensus on this method, some aspects may not recognize certain ordinals, and therefore not recognize specific BRC-20 tokens.

If we want to see a market with more than a few thousand holders, there is still a lot of work to be done. Although we remain optimistic about what BRC-20 tokens unlock and what they can offer, there is still a long way to go in terms of infrastructure.


translates to

No practical use

Currently, most (if not all) of the BRC-20 tokens being traded are Meme tokens. By definition, these tokens have little to no utility and are primarily influenced by social media and community sentiment. While this has brought attention and created hype, the lack of practical use results in a lack of serious holders, meaning these tokens could potentially crash suddenly and without warning.

This type of risk is something that every reader should keep in mind. Additionally, if you come across a new token that offers some form of utility, you should dig deeper and question whether it is truly legitimate or just a marketing gimmick.

High risk of fraud

In order to cooperate with the new theme of the entire experiment, we should remember that this means there is a high risk of fraud. For example, OTC token trading on Discord servers is a very high-risk activity that has already led to many people being cheated out of money. Projects that build infrastructure for ordinal or BRC-20 are also uncertain and may bring potential security risks at this early stage. Although we are not trying to scare off readers, given that it is still the early days of these tokens and this new technology, the risk of fraud is high and should be taken seriously.

7. Future Outlook

Bitcoin Layer 2

This entire frenzy shows that the scale of Bitcoin does not match its grand goals. If it's not ordinal, inscription, or BRC-20, it will be something else. **As long as a few million more people decide to use Bitcoin for peer-to-peer transactions, we will have the same result, skyrocketing transaction fees; this surge is caused by BRC-20, which is irrelevant.** If so, we should take this as a warning for the future and understand that if Bitcoin is to truly become a global peer-to-peer payment system for millions or even billions of people, a lot of work still needs to be done.

This further illustrates that the scaling methods used by other chains are also crucial for Bitcoin. Do we need to send a $5 transaction on Bitcoin L1, or can it be done on the L2 layer? Many people believe that underlying transactions are a scarce commodity and that if the chain is to develop, we cannot expect them to remain cheap forever. The conclusion to be drawn here is simple: the use cases for Bitcoin L2 are clear, and this is where developers should focus their attention. If Bitcoin is to become a technology that millions of people can use regularly, scalability solutions will be the next key step for Bitcoin to take.

In our report "A New Era for Bitcoin?", we carefully examined potential solutions including Lightning Network, Stack and Rootstock, as well as quick-start guides for Liquid Network and Rollkit. The upcoming release of sBTC[6] by Stack looks particularly interesting and may provide a more decentralized way to use BTC on L2 than is currently possible. The use of Lightning Network continues to rise, with Binance recently announcing they are seeking to integrate it, while startups like Lightspark[7] are creating "enterprise-grade" network gateways to allow businesses to join. The Bitcoin open-source development platform Spiral, backed by Jack Dorsey, recently released an ambitious new roadmap [8] for its Lightning Development Kit (LDK) project.

The future of Bitcoin's secondary market looks promising, and as more users and developers see the clear use cases for Bitcoin scalability, we remain optimistic about the development of this field next year.


As mentioned in the "Risks and Challenges" section above, the infrastructure around BRC-20 tokens is very limited at this early stage. Although many different aspects, such as Unisat and ALEX, have released test versions or are researching solutions, we are still in a very early and experimental stage.

The transaction process must become significantly smoother, and peer-to-peer Discord server transactions should be gradually phased out in the coming weeks and months. Fully deploying a feature-rich and efficient DEX is a key step in taking BRC-20 to a new level and should be closely monitored.

Additionally, as BRC-20 token standard founder domo recently stated in a Twitter space, his top priority is to enable a fully on-chain and trustless indexer release. An indexer is software that reads the Bitcoin blockchain and compiles all transactions to create an agreed-upon global state of balance. UniSat and ALEX are both researching solutions in this area, and an effective indexer will be crucial as it will further increase the legitimacy of BRC-20.

We expect significant developments in the coming months in related infrastructure. For example, the Bitcoin Frontier Fund recently announced [9] that their accelerator program has accepted 8 new startups. These startups are researching various solutions, from ordinal lending to development toolkits for Bitcoin Web3 games, to cross-chain bridging of ordinals. Developer interest in the Bitcoin ecosystem is clearly benefiting from this recent wave, and we are excited to see what kind of innovation can emerge from it.

Token Design Innovation

Finally, regarding the specific innovation of BRC-20, we should once again note that this is a very simple token standard with limited flexibility.

One key feature is that all BRC-20 token minting is fairly distributed, meaning that team allocation or traditional "whitelist" functionality cannot be used to allow some users to mint tokens before others. Although this functionality was initially used to reduce the prevalence of rug pulls and scams, there are legitimate reasons to have "whitelists" and tokens with team allocations, etc. Builders are working to address this issue, and whether the solution appears in BRC-20 or perhaps in other token standards remains to be seen.

Similarly, developers are also trying to find a solution to "burn" tokens. Given that BRC-20 lacks smart contract functionality, this is currently impossible. However, there may be some very real and legitimate use cases, especially when considering adding different utilities to these tokens.

Outside of BRC-20, builders have been innovating rapidly. ORC-20 tokens have recently appeared on the timeline, aiming to address some of the limitations of BRC-20. For example, BRC-20 tokens are currently limited to a four-character naming convention. ORC-20 does not have such a limitation, adding a degree of flexibility for developers. We also see the prototype of SRC-20 tokens, which are related to "Bitcoin postage stamps". The way SRC-20 tokens store data is different from BRC-20 tokens, and due to some technical specifications, they may be more secure than BRC-20, but this also means that they can store much less data than BRC-20.

These are just a few examples of symbolic design features that builders are trying to innovate. We believe there will be many other things that will emerge, and we will closely monitor the progress of development.

8. Conclusion

Ordinal numbers, inscriptions, and BRC-20 tokens have helped prove to the world that there is indeed a demand for Bitcoin block space beyond the classic peer-to-peer payment model. Users want to do the same things on the Ethereum and BNB chains, but on Bitcoin. Although Casey and Domo have helped stimulate innovation with their unlocks, it is now up to the community and developers to take it to the next level.

The lack of income from transaction fees for miners has always been a key concern for many Bitcoin supporters, and this recent wave of activity has just proven the potential that exists outside. Recent developments are encouraging and help represent potential avenues for sustainable long-term development of Bitcoin.

Bitcoin Layer 2's scaling solutions will be crucial, and we expect to see growth in this area. Further infrastructure development and token innovation are also on the menu.

Before we conclude, we would like to remind readers that the growth of cryptocurrencies is often exponential. For example, it took over a month to reach 100 after the first inscription on December 14, 2022. However, between February 2 and February 15, the number of inscriptions increased from 1K to 100K. By April, we had reached 1 million and now we have surpassed 7 million. The market initially grows slowly and then suddenly increases. While we cannot say how big this market will be, we can predict that we will soon surpass the milestone of 10 million inscriptions. Please keep a close eye on this space.

Figure 16: The exponential growth of inscriptions so far


Source: Dune Analytics (@dgtl_assets) Binance Research, as of May 16, 2023


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